Multipotent mesenchymal stromal cells (MSCs) hold tremendous promise for tissue engineering and regenerative medicine, yet with so many sources of MSCs, what are the primary criteria for selecting leading candidates? Ideally, the cells will be multipotent, inexpensive, lack donor site morbidity, donor materials should be readily available in large numbers, immunocompatible, politically benign and expandable in vitro for several passages. Bone marrow MSCs do not meet all of these criteria and neither do embryonic stem cells. However, a promising new cell source is emerging in tissue engineering that appears to meet these criteria: MSCs derived from Wharton's jelly of umbilical cord MSCs. Exposed to appropriate conditions, umbilical cord MSCs can differentiate in vitro along several cell lineages such as the chondrocyte, osteoblast, adipocyte, myocyte, neuronal, pancreatic or hepatocyte lineages. In animal models, umbilical cord MSCs have demonstrated in vivo differentiation ability and promising immunocompatibility with host organs/tissues, even in xenotransplantation. In this article, we address their cellular characteristics, multipotent differentiation ability and potential for tissue engineering with an emphasis on musculoskeletal tissue engineering.